John D. Whitley

Long-Run Properties of Large-Scale Macroeconometric Models

We consider alternative approaches to the evaluation of the long-run properties of dynamic nonlinear macroeconometric models, namely dynamic simulation over an extended database, or the construction and direct solution of the steady-state version of the model. An application to a small model of the UK economy is presented. The model is found to be unstable, but a stable form can be produced by simple alterations to the structure.

Large-Scale Econometric Models of National Economies

Macroeconometric models are in continuous use in macroeconomic forecasting and policy analysis, and are continuously developing. The first part of this paper focuses on some current developments in both economic theoretic and econometric aspects, including supply-side modeling, the treatment of expectations, dynamic specification and testing, model comparisons, and glasnost. The second part is a comparative study of the properties of five Nordic models, highlighting key structural contributions to their supply-side responses. Differences in modeling approach, rather than differences in the underlying economies, explain most of the differences in overall model properties; these then form an agenda for future comparative research. Copyright 1991 by The editors of the Scandinavian Journal of Economics.

The importance of the distinction between long- and short-term unemployment in UK macroeconometric models

This paper examines the degree of support for distinct duration effects on wages across a variety of wage equations, and investigates their importance in full simulations with three large-scale UK macroeconometric models. The paper begins by highlighting deficiencies both in the way that existing models determine the duration structure of unemployment and in the specification of long-term unemployment in the wage equation. By constructing a single preferred wage equation we test hypotheses relating to duration effects and, although tests are not conclusive, find some support for the use of short-term unemployment in the wage equation. However, it is also shown that the response of wages to changes in unemployment is similar regardless of whether aggregate or short-term unemployment is used in the wage equation, although this does not hold when the duration structure of unemployment changes radically. By substituting revised equations into the models we show that these results carry over to full model simu...